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New York Times
Jan 21, 1999
by David Cay Johnston
$116 Million Punitive Award Against AetnaA jury in California yesterday awarded $116 million in punitive damages to a patient's widow who contends he died after a subsidiary of Aetna Inc., the nation's largest health insurer, delayed approving treatment for stomach cancer that its own doctors had recommended. Lawyers on both sides called it the largest such verdict against a health maintenance organization.
Aetna said it was confident that the damages would be overturned on appeal, as would a finding by the jury in San Bernardino County Superior Court last week awarding $4.5 million in actual damages in the 1995 death of David Goodrich, 44, a career local prosecutor.
The previous record, an $89 million award in a similar case five years ago, was later settled for a small fraction of the original amount.
Mr. Goodrich's case, which comes against a growing national backlash against the restrictive policies of H.M.O.'s, is unusual because most Americans are barred by a 1974 Federal law from suing their health insurer or H.M.O. for any damages except unpaid bills even if treatment they are entitled to is refused. The 1974 law does not even allow collection of legal fees.
Mr. Goodrich's widow, Teresa, could sue because her husband was a Government employee not covered by the Employee Retirement and Income Security Act.
Mr. Goodrich collapsed in a courtroom in San Bernardino, 60 miles east of Los Angeles, in 1992. His doctors in Aetna Health Plans of California said that his illness was beyond their skills and referred him for treatment to doctors outside the H.M.O.
Doctors at the City of Hope hospital in Duarte, Calif., recommended a bone-marrow transplant in October 1992 and the Aetna doctors agreed, said Mike Bidart, Teresa Goodrich's lawyer.
"The standard for approval is 48 hours, but Aetna delayed for six months until the cancer spread to his liver and it was too late," Mr. Bidart said.
David Simon, the chief legal officer of Aetna's managed care subsidiary, Aetna U.S. Healthcare, said last night that the H.M.O. had acted promptly at all times, "but when the question of treatment was put to us, it was too late. It is unfortunate that attorney Goodrich had terminal cancer, but we did nothing to hasten his death."
Elizabeth Goodrich, the deceased's sister, said last night that she was shocked by Mr. Simon's remarks. "Aetna not only delayed, but they admitted in court that they did not meet their own standards for acting quickly," she said.
Ms. Goodrich said that her brother died believing that his chances of survival, while not good, were lost because of Aetna's conduct.
Mr. Bidart, of the Shernoff, Bidart, Darras & Arkin law firm in Claremont, Calif., said that Aetna had denied coverage on the grounds that the bone-marrow treatment was experimental and thus not covered, but that the insurance policy covering Mr. Goodrich had no such exclusion.
Mr. Simon said that the judge refused to allow Aetna to present evidence showing that the treatment Mr. Goodrich and his doctors proposed was excluded.
In January 1995, when Mr. Goodrich was near death, he underwent abdominal surgery at St. John's Hospital in Santa Monica, Calif., to relieve his pain. The next day Aetna hand-delivered a letter denying payment for the surgery because it was done outside the H.M.O. network without advance approval.
"Aetna's position was that if you are disloyal, your benefits are cut off," Mr. Bidart said.
Mr. Simon said that the letter was required under California law and was not a sign of callousness by the H.M.O.
He added that the jury was never told that Mr. Goodrich had a second insurance policy through his wife that covered his treatment. The $775,000 in medical bills have since been paid by the two insurers, another fact the jury was never told, Mr. Simon said.
"This was an emotional verdict by an inflamed jury that we are confident will be overturned when all of the evidence is heard by dispassionate appellate judges," Mr. Simon said.
Mr. Bidart had asked the jury to award about $32 million in punitive damages, roughly the value of Aetna's surplus in California above legally required reserves. Mr. Simon said the punitive damage award was six times the California H.M.O.'s net worth.
The largest previous award against an H.M.O., for $89 million in April 1994, was returned by a jury in neighboring Riverside County, also for refusing bone-marrow treatment. The patient, Nelene Fox, died. Jamie Court, director of Consumers for Quality Care, a nonprofit H.M.O. watchdog group in Santa Monica, said the Goodrich verdict was a message to Congress as well as Aetna.
"Court cases like this are rare because most Americans, 125 million of them, cannot under Federal law sue their H.M.O. for bad faith or denying treatment," he said. "The jury was telling Congress to pay attention to denial of rights that kill patients."
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